Yesterday’s Star Tribune carried a story that I know something about through my day job: “13 charged over tobacco sales fraud.” It’s a story that has a subtext the reporters don’t touch. Here is some text:
Thirteen people face federal charges of defrauding the state of more than $2.5 million in sales tax by concealing revenues from cigarette sales, according to a federal indictment unsealed Thursday.
The indictment, which according to attorneys in the case was unsealed by a U.S. District Court magistrate judge, cites numerous attempts to conceal earnings and wealth through fraudulent bookkeeping and tax returns, as well as property transfers and large cash transactions.
One defendant is accused of stashing $1 million cash in his ceiling, and another allegedly bought a BMW car with $20 and $50 bills.
Scott Tilsen, a federal public defender, said it is too early to know the full extent of what the government claims or what it can prove.
“They’ve charged a form of tax evasion over a four-year period involving a large number of individuals named and unnamed,” Tilsen said. “Traditionally, there’s always a few tax prosecutions brought … as we approach April 15.”
The case, the result of a joint investigation by the FBI and the Internal Revenue Service, includes one conspiracy count, 13 mail fraud counts and 26 wire fraud counts.
In addition to conspiracy charges, 11 of the defendants are accused of mail and wire fraud involving false or incomplete sales tax payments or filings.
All but one of the 13 defendants uses or has used the last name Wazwaz.
The defendants own 52 Twin Cities-area tobacco stores, including Wholey Smokes in Blaine, Coon Rapids and Minnetonka, and Mr. Discount Tobacco I in Fridley and II in Roseville.
When I had a glimpse into the case, it was part of a joint investigation that included the ATF, the IRS, and the FBI. Why might it attract the attention of three federal law enforcement agencies? The need to dig beneath the surface of apparently routine tax evasion charges is suggested by the reporters’ description of the indictment:
The 58-page indictment alleges that the dozens of transactions date from 1996 through the present and details numerous transactions involving thousands of dollars.
The defendants also are accused of transferring nearly $1 million to Jordan, Lebanon and the Palestinian territories through checks, currency and wire transfers backed by the tobacco store proceeds.
An unindicted co-conspirator was caught at the Minneapolis-St. Paul International Airport in March 2003 with six cashier’s checks worth $108,030 destined for Lebanon, the indictment said.
The reporters don’t suggest that the money might have been put to nefarious uses in Jordan, Lebanon and the Palestinian territories, but I suspect the authorities have reason to believe that it has. If the reporters had checked the Star Tribune story on the seizure of the cashier’s checks from the unindicted co-conspirator at the airport in 2003, I believe they would find that the cashier’s checks had been sewn into the lining of one of her bags. Rather than dig a little beneath the surface of the story, the reporters quote federal public defender Tilsen:
“There’s millions of Americans who send funds to relatives overseas,” Tilsen said, noting that the money can add up over time. He represents Yousef Mahmoud Wazwaz, also known as Joseph Mahmoud.
Sometimes you have to wonder how attorneys keep a straight face when serving up such bilge. I have a hard time keeping a straight face just reading about the “the family” — one group named Mohamed, one named Mahmoud, and two other groups — and the alias of one of the members who has already pleaded guilty:
Most of the defendants belong to four groups of brothers identified by their names: Othman, Mohamed, Yassin and Mahmoud.
They own tobacco stores in the Twin Cities and concealed the revenue and expenses of those stores or the identities of the people deriving economic benefit from their operation, according to the indictment.
At least two of the defendants already have pleaded guilty to federal charges in connection with cigarette sales.
Zuhair Wazwaz, also known as Anthony Stallone, pleaded guilty in 2004 to mail and wire fraud. Adel Salem pleaded guilty that same year to mail fraud. They pleaded guilty to ordering nearly $1 million in cigarettes with no intention of paying for them.
Although the Star Tribune story doesn’t do any digging, it is long, detailed and worth reading in its entirety.
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